Best of the Blogs 2009

byBrad FerrisonDecember 7, 2009

Welcome to the Best of the Blogs 2009 – Financial Edition.

In this article readers will find a detailed compilation of what might be the best online financial content to appear during 2009 on a number of high quality websites run by prominent bloggers and financial authors.

I asked each author to submit a short description of what they learnt in 2009 related to investing and their best article published on their websites.

The Dividend Guy writes,

“2009 was an interesting year. It started out being the end of the world. Now here we are 12 months later and things are looking much better. My portfolio did the same thing. The main point being that markets go up and down, and so does our portfolio. What protected me somewhat was a sound asset allocation, although I realised that I need to get my fixed income allocation much closer to my chosen 36%. The most important aspect of a portfolio is a sound asset allocation – that is what limits your losses when the real trouble starts.”

Best Article: The Tyranny of Investment Fees.

“…In the example, the growth of $10,000 over a 50 year period before costs was 8%. After costs (transaction fees, spreads, other commissions) the return drops to a whopping 5.5%. Doesn’t sound like much of a difference? Let’s look at it in terms of real dollars – at 8% the investor is left with is over $469,000. At 5.5% (the impact of fees) the investor is only left with $145,500. That is a difference of $323,500. I don’t know about you but to me that is a huge amount of money.”

“With regards to investing in 2009, I’ve learned many things, mainly that the stock market is unpredictable. Even with weak economic fundamentals, the stock market has defied logic and continued it’s bull run for most of 2009. Even though the market has been volatile, 2009 has reaffirmed my belief to stick with the game plan. If I were to sell all my dividend holdings (like some) at the worst of the bear market, my portfolio would be in really bad shape. However in hindsight, perhaps I should have bought more in March 2009.”
Best Article: My Million Dollar Journey – Some Lessons Learned

“…Life shouldn’t be all about money. Life is about experiencing new things, relationships, people and following your dreams. At your funeral, will your eulogy include all of the “material things” that you have accumulated? Of course not, it’s going to be about the relationships you formed, how you affected people, and the kind of person you were.”

“…I couldn’t begin to estimate how many different stocks are traded around the world on the various exchanges. Like everything else, there are many participants, but few players. Though the population of stocks may be large, there are only a precious few that are worthy dividend stocks. When spending my time looking for worthy investments, there are four primary places I look…”

“What I learned in 2009: Buy and Hold is Dead. Even diversification failed investors when all asset classes collapsed simultaneously. This has become a stockpicker’s market. Investors should also familiarize themselves with currency implications on stocks and commodities as well.”

“…How Stock Options Work – Whether or not investors trade options, they should at least have a basic understanding of the concepts so that they may consider strategies in the future such as hedging, bracketing gains for tax purposes or generating income from selling options.”

Larry MacDonald submitted A taxpayer’s rant

“…We might ask: are taxpayers getting value for their money? A resounding NO has to be the answer. It has been such for a long, long time. These latest boondoggles are just more of the same, most of which never sees the light of day thanks to the culture of covering up and obfuscation that prevails in the civil service. It’s really about time taxpayers demanded and received more value in the provision of public services. Why are unions allowed to go on strike in sectors where government is the only legal provider? Unions + monopoly supply = gouging the user. There are no market forces to restrain the whims of public sector unions. Disputes in these sectors should be resolved through arbitration and follow private sector benchmarks.”

“Given the behavior of the stock market in the past year, I’ve realized just how important diversification is and just how big your asset allocation plays a role in how successful you’ll be as an investor. It may be obvious now, but many people forget that just as the market can soar for long periods of time, the market can also give back and be subject to stomach churning drops. The stock market is like a roller coaster and you’ll need to find out the best way to ride it. In my case, it’s to stay well diversified and to avoid moving with the emotional herd, while others (the traders among us) are more successful at avoiding the downtrend by employing their skillful market timing plays. Regardless of which approach you decide to take, it’s imperative to keep with your long term financial plan and to avoid letting your emotions fall prey to the whims of the market.”

“…To go cheap, I house my investments in a mix of both no load mutual fund companies and discount brokers. As a stock investor, you could go the mutual fund route with great names like Vanguard, Fidelity, Charles Schwab, and T. Rowe Price, but to add some flexibility to your portfolio at really affordable transaction rates, you may also be interested in signing up with an online discount broker. I did some research and compiled this list of low cost online stock brokers…”

“Regarding what I learnt this year, I would say that it is important not to forget that net income is a rather meaningless figure without cash receipts from customers. In other words, companies can make their net income look good with a ballooning receivables balance, so considering that cash received from customers is extremely important, particularly in recessionary times when collecting receivables becomes harder.”

“…It makes a lot of sense that the aggregate value of a country’s stock market should be correlated with its Gross National Product (GNP). Assuming the stock market contains most of the country’s largest companies, the value of what those companies produce should constitute a large part of GNP and should also play a large role in determining what those companies are worth, hence the suggested correlation…”

“I have learned that the world is a place full of hysterical people creating huge opportunities for rational individuals! When everybody says all fine you gotta run for your life and when they say we are all going to die you have to run right to the opportunities! These are always created by the lack of rationale and judgement in the general population. This is the real way to make money!”

“…I remember when I started working at the bank at 22, I was an administrative clerk in the back office of a brokerage company. I was balancing trades on stock options and futures, making $30,000. Back then, I was already thinking about making a 6 figure income. I really wanted to hit the magic $100,000 salary as fast as I could…”

“During this important recession, most people started to think about being more frugal and saving money for the dark days. Several individuals thought about cutting down their expenses but never thought of increasing their income. There is a limit to how much you can cut on expenses, but you can always find ways to increase your total income.”

“…A very common theme in these emails is something along the lines of: “I am very frugal and spend little to nothing, but still don’t have enough money to make ends meet“. My reply? You don’t have a spending problem, you have an income crisis. At some point you can only reduce expenses so far. Once there you are faced with only one option: increasing your income. Surprisingly, that may not be as hard as you think…”

“I have learned that there is no free lunch in finance! When something is too good to be true (like making twice or 3 times the market with leveraged ETFs), it is because its not true at all! Being careful through your investment selection process is rule #1, in order to build a solid (and profitable!) portfolio! As Warren Buffett says: I don’t invest in things I don’t understand.”

“…Over the past few months, I’ve seen many investors jumping into a new type of product that has been gaining popularity… leveraged ETF’s. What are they? They are basically structured products that promise to give you double the exposure for a specific product (most often specific indexes or sub-indexes). Seems great doesn’t it? Of course there are more fees associated with these funds because they trade more often and need to borrow funds to get the double exposure. That is fair of course and understood by most investors…”

“You do not have to be the smartest, most learned, best looking or luckiest person in the world to be a good investor. Instead, in a year where we began talking about our impeding economic doom and leave wondering if we are forming new bubbles, the key to success in personal finance, if not life, is emotional control.”

“The question turns, therefore, what would investor returns be like without financial advisors? In other words, what if we all became DIY investors? Sweden is mostly known for its knock-off designer furniture and talented hockey players but it has implemented the closest real life experiment of a life without advisors. The results may show that, in some cases, blaming the advisor is nothing more than shifting responsibility for failing to control our worse excesses.”

“It’s surprising what a difference a year can take. The whole world was supposedly ending up until March when euphoria kicked and the world became stable again. It was the scariest time for a new investor to begin investing, yet it was the best time. In the end the age old value investing messages of Graham and Buffett rings loud and clear. Buy cheap stocks. Buy when everyone is fearful. Even down 50% in some positions, had you averaged down, instead of selling, you would have made a big profit. Value investing works.”

Best Article: How to Invest In the Stock Market-Getting Started
“After reading many news and stock tip articles off the internet, everything still made no sense and I remained clueless after spending so much time reading. So I did what we all do when we start learning about a new topic. Identify the basics work up towards the intermediate level followed by advanced techniques.”

Disclosure: Submissions were edited for grammatical errors and punctuation. No compensation was received for inclusion of any content written by the above authors. The views expressed in this article are not the view of Brad Ferris, Triage Capital Management Incorporated or this website and should not be construed as financial advice.